Allstate Insurance Company has agreed to pay a $4 million fineand provide more than $30 million in policy credits and premiumreturns to customers whom California regulators say wereovercharged for home and auto coverage.

California Insurance Commissioner John Garamendi announced theagreement with the company. The Northbrook, Ill.-based insureradmitted no wrongdoing in the matter.

The case involved Allstate's practices from Jan. 1, 2000 toApril 12, 2002. During this time, Allstate employed a "FinancialStability" process for rating customers, which in the opinion ofCommissioner Garamendi was a form of credit scoring that placedsome consumers in programs with higher rates. California does notpermit credit scoring for auto insurance.

Norm Williams, a spokesperson from the California Department ofInsurance, said the practice "can be discriminatory in its impactand that any insurer that wants to use it [in California] mustprove to the commissioner that it does not discriminate, butAllstate did not do so."

Allstate has since discontinued the disputed practices in thestate and Rich Halberg, a company spokesperson, said the settlementcould affect up to 250,000 policies, which represents roughly 8percent of the company's policies in California.

As part of the settlement, Allstate also agreed to review itsprocess for handling claims with respect to the 2003 Californiawildfires. Mr. Halberg stated that the review was not related tothe rate claims allegations but does represent "the full and finalresolution of all administrative action resulting from thewildfires."